Assignment Essay Example | Topics and Well Written Essays - 750 words - 9

Assignment - Essay Example This will help in assessing in determining company’s ability to meet interest and principal repayment obligations. 2. Company’s balance sheet suggests an increase of $35,990.00 during a period 2011-12 in the value of inventory. This risk area will be examined by carrying out substantive procedures to confirm the existence of inventory and its value. 3. Company’s overall financial statements including balance sheet and income statement will be evaluated for compliance with the accounting standards set out by FASB or GAAP. This will also include the assessment of information systems responsible for preparation and reporting. Conducting interviews during an audit aims at gathering both verbal and non-verbal cues using concrete, unambiguous and descriptive language for questions and replies. The interviews are carried out of those individuals who are responsible and have the knowledge of the areas under audit review. The interviews will be conducted by the auditor to gather useful information regarding various aspects of the business and its sufficiency and appropriateness will be assessed. Non-verbal cues are important at the same time as they point out reactions of interviewee to different questions and allow auditors to ask follow on questions to probe further. Important risk areas will be examined by gathering evidence from different sources including physical examination of inventory, financial statements, internal documents and information systems. In the particular case of Torpus, auditor should raise concern regarding the event that took place at the restaurant which suggests that Mr. Ronaldâ€⠄¢s credit card did not work and he could have problems regarding Statement on Auditing Standards No. 106 provides guidelines for gathering reliable audit evidence from inquiry, observation, inspection and analytical procedures. Auditors need to have a